Creative use of optional terms for a HECM reverse mortgage assures this type of loan remains popular. Older Americans may draw only as much as needed.
According to the Federal Trade Commission, a HECM reverse mortgage is potentially the lowest cost option when considering a non-recourse home equity loan. The flexibility incorporated in this type of qualified loan makes it one of the most popular choices for retirees. Funding options are almost unlimited.
A HECM Reverse Mortgage
A Home Equity Conversion Mortgage is commonly known as a HECM reverse mortgage. This type of home equity loan is a fully guaranteed by the U.S. federal government. Specifically, the Department of Housing and Urban Development qualifies these loans for conformity with federal requirements. Because qualification, the federal government guarantees these loans and homeowners are assured that the solvency of the lender will not affect the availability of established lines of credit. If the original lender is not capable of funding futures draws, HUD will nevertheless honor commitments.
Terms of a HECM Loan
Once qualified for a HECM reverse mortgage, homeowners may chose among four different funding options. First, a term option is available that allows funding fixed monthly draws over a designating period of time. Second, a tenure option allows funding fixed monthly draws so long as at least one owner continuously occupies the residence. Third, a line of credit option establishes a maximum limit for available principal withdrawals that may or may not be funded, depending upon the election of homeowners. Fourth, homeowners may combine these options to create both fixed monthly payments and an additional emergency line of credit that may be used if necessary.
The flexibility of a HECM reverse mortgage creates a wide range of funding options. Homeowners may choose to supplement existing income monthly, but only use as much credit as necessary to maintain a household budge. Excess credit availability can be safely maintained, regardless of funding, for use as a ready source for emergency cash.
Related posts:
Very informative text. I’ve found your blog by accident but I’m really happy that i did. You have some really good info on here, BTW I can’t get the RSS feed to work, do you have any suggestions?